U.S. grants quota leeway for Indonesian textiles

JAKARTA (JP): The United States has agreed to give more leeway for Indonesia's exports of textiles and textile related products to that country.

Director general for International Trade from the Ministry of Industry and Trade, Anang Fuad Rivai, told journalists the United States' decision was reached in a three-day bilateral consultation early this month.

"As a result of the consultation, the United States agreed not to apply Indonesia's quotas on textiles imported from other countries, even though the raw materials were actually being produced in Indonesia," Anang said.

Since July 1, 1996, the United States has enforced a new set of rules of origin for the import of a wide range of products, from T-shirts to pants.

Earlier, the origin of a product was determined on the basis of where substantial transformation of the product had taken place, generally meaning where the cloth used in the product was cut.

However, from July 1, the new rules confer origin to the country where the product is produced or assembled.

Consequently, the United States' imports of textile products from any countries which use Indonesia's grey fabrics are subject to Indonesia's quota.

Anang, who was accompanied by PT Texmaco's President M. Manimaren, called on Indonesia's textile producers and exporters to use the opportunity to increase their exports to the United States.

He also called on local textile printing industries to improve their production capacities to absorb more locally produced grey fabrics, most of which are currently exported to various countries for re-export purposes.

According to data from the Directorate General of International Trade, Indonesia's textile exports to the United States steadily increased to US$1.24 billion, in 1995, from $1.15 billion in 1994, $1.14 billion in 1993 and $997 million in 1992.

At the same time, Indonesia's total textile exports increased to $6.20 billion in 1995, from $5.79 billion in 1994, $6.18 billion in 1993 and $6.14 billion in 1992. Textile exports constitute 14 percent of Indonesia's total export market.

The government has lowered its annual textile export target to $10 billion per annum by the end of the current Five-Year Development Plan, from a target of $12 billion, due to slow textile export growth.

The secretary-general of the Indonesian Textile Association, Benny Sutrisno, said the slow growth of textile exports is mainly caused by the current shortage of textile products.

Benny, also present at the conference, suggested Indonesia's textile producers could double their production capacities to meet domestic and international demand.

The combined capacity of all textile producers currently stands at 1.1 million tons per annum, while national annual consumption steadily increases. Domestic consumption reached 787 tons in 1995, up from 692 tons in 1994.

Benny predicted national textile consumption to reach 900 tons this year, with the upward trend continuing to increase to up to one million tons by the year 2000. (06)